Thursday, June 29, 2017

The US government is Illinois 2.0 on steroids. The key difference being, of course, the US Treasury and Fed will just create more dollars out of thin air, and Congress will just raise the debt limit, kicking the can down the road further. The problem is one day, that can will be a boulder.

Wednesday, June 28, 2017

Sovereign nations looking to de-dollarize (for good reason) may want to reconsider (for good reason). The US military industrial complex and the banking cartels which fund the perpetual wars don't look kindly on those attempting to abandon the petrodollar's reserve currency status.

A
possible explanation for the negative correlation between gold and the
dollar may be found in the attribute as a safe asset in crisis
situations. Although the dollar and gold may superficially be considered
substitutable, a closer examination reveals a different picture. In
local crises, the US dollar is seen as a desirable asset by many market
participants because the survival of the fiat money system as such is
not questioned.

It
is different in the case of systemic crises. In these situations,
confidence in fiat currencies and the banking system is shaken and many
market participants pay heed to gold’s historical function as money.
Particularly in systemic crises, gold is perceived to maintain its
value, while paper money is in danger of becoming completely worthless.

Sunday, June 25, 2017

Jim Rickards is a stud--let's just get that out of the way. He has the academic and government pedigree, but he is also street smart and clever to boot, as a hedge fund manager and former Wall Street attorney. He's not a feckless bureaucrat by any stretch, often formulating a contrarian opinion divergent from Wall Street's echo chamber of group think.

The result is a straightforward, but insightful assessment of potential black swans, often combining theories of complexity and game theory.

Saturday, June 17, 2017

My view on Bitcoin is somewhat ambivalent. As I blogged 4 years ago,
it is a legitimate currency, as it is being used by many and is now
being endorsed by financial institutions, even if reluctantly. It made
sense as a hedge earlier when prices were much lower, as the fiat
currencies are being systematically debased globally (central banks are
creating their sovereign currencies with reckless abandon).

But are crypto-currencies sound money? I contend they are not, because
while Bitcoin has an upper quantity limit of 21 million, that doesn't
preclude others from creating alternative blockchain crypto-currencies
(including the institutional favorite, Ethereum). Indeed, there are
thousands of cryto-currencies in existence today already. In other
words, while Bitcoin is limited to an eventual quantity of 21 million (a
good thing for maintaining purchasing power), there is no shortage of
competing crypto-currencies (which is a bad thing).

There are other real risks of possessing crypto-currencies (the biggest
being forgetting your password, rendering permanent loss of access).
Owners have been hacked, exchanges have been hacked, despite 256-bit
encryption and peer-to-peer infrastructure), or the grid could go down.
In a mad world of fiat currencies where the financial elite can steal
wealth from the masses via the printing press, Bitcoin is a viable hedge
option. But is it the ultimate safe haven asset? No.

It's usually prudent to consider all sides of a concept or debate. Hugo
Salinas Price is a Bitcoin skeptic--no, check that--he's a Bitcoin
cynic, and makes some valid points. Granted, he's a big advocate of
silver, so he is essentially "talking his book". But he ponders some
questions which any wise person should consider.

This is a must-read for those who don't understand why the media broadcasts positive economic numbers when Main Street reality is completely opposite. Residents are being squeezed by our corrupt banking system and thus, can't make ends meet. Yet, the presstitutes keep cheerleading that everything is awesome.

While I agree with him in principle, I don't believe UTIMCO went far
enough. Their gold bars do exist, but they are stored in HSBC's
vaults, the custodian for the GLD ETF. There have been some grumblings
of HSBC manipulating GLD shares and physical inventory, as well as
accusations of JPMorgan manipulating the SLV ETF for silver. It's the
ol' fox guarding the hen house syndrome. If I were UTIMCO, I would go
even further, and send a team of Texas Rangers to HSBC's vaults in New
York, repatriate and transport those gold bars back to Austin, Texas.
After all, if/when the $hit does hit the fan, possession is 100%
ownership--irrespective of legal paper claims.

Tuesday, June 6, 2017

This guy gets it. Record-high markets can surge ever higher, in a so-called crack up boom. A bull market climbs a wall of worry, with prognosticators anticipating a collapse which ultimately occurs later rather than sooner.

The author acknowledges a stock market crash will occur, but it will occur only after the bond market collapses, which is the bigger bubble. And the collapse will be inflationary in nature, not deflationary, as most pundits predict. In other words, the smart money will eventually be proven right--but they will also be early and probably lose a lot of money before they will eventually be proven right.

It's difficult to be a contrarian when the majority of people agree with you.

Similar to generals fighting previous wars, investors are fighting yesterday's crises. NO ONE is expecting inflation to be an issue--deflation is the boogeyman declared by everyone in the financial services industry. In fact, the global monetary authorities (including the Fed, the Treasury, and other central banks) have stated a "desirable" inflation goal of 2% (the way inflation is calculated is understated, which deems these inflation targets meaningless anyway).

My forecast is that they will reach their inflation goals, and even exceed them, at which point, the Fed will lose control of the long end of the bond curve, resulting in runaway inflation. It will be hard to put the inflation genie back into the bottle. The end game is a collapsing bond market and soaring interest rates, as confidence in the purchasing power of the dollar will dissipate. Be careful what you wish for: you may get it--and some.

In rare moments of candor, the IMF and BIS does have a history of sharing concerns. IMF Managing Director Legarde blurts out 200 million workers are unemployed in the western world. She also keeps mentioning the word "reset", more specifically "global monetary reset."

That is globalist code speak for the USDollar losing its petrodollar status as the global reserve currency. In its place will be the Special Drawing Right, an IMF currency consisting of a basket of dollars, euros, sterling, yen, and now Chinese yuan.

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Welcome

Some of our best ideas come to us during the most inopportune times: waking up, in the shower, driving along a country road...my blog is an attempt to capture these epiphanies, whether whimsical or serious in nature. These blogs are heavily weighted toward financial matters and/or innovation (e.g. disruptive technology)--normally boring subject matter. But when sprinkled in with meanderings about human nature, I hope to shed some light on oft-misunderstood topics--without being dogmatic. Enjoy and perhaps learn a thing or two from my moments of clarity.

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